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Preference Evolution, Two-Speed Dynamics, and Rapid Social Change

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  • William H. Sandholm

    (Department of Economics, University of Wisconsin, Madison)

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    Abstract

    We present a dynamic analysis of the evolution of preferences in a strategic environment. In our model, each player's behavior depends upon both the game's payoffs and his idiosyncratic biases, but only the game's payoffs determine his evolutionary success. Dynamics run at two speeds at once: while natural selection slowly reshapes the distribution of preferences, players quickly learn to behave as their preferences dictate. We establish the existence and uniqueness of the paired trajectories of society's preferences and aggregate behavior. While aggregate behavior adjusts smoothly in equilibration games, in coordination games aggregate behavior can jump discretely in an instant of evolutionary time. (Copyright: Elsevier)

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    File URL: http://dx.doi.org/10.1006/redy.2001.0128
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    Bibliographic Info

    Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

    Volume (Year): 4 (2001)
    Issue (Month): 3 (July)
    Pages: 637-679

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    Handle: RePEc:red:issued:v:4:y:2001:i:3:p:637-679

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    Related research

    Keywords: evolutionary game theory; evolution of preferences; coordination games;

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    References

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    1. Huck, Steffen & Oechssler, Jorg, 1999. "The Indirect Evolutionary Approach to Explaining Fair Allocations," Games and Economic Behavior, Elsevier, vol. 28(1), pages 13-24, July.
    2. Steffen Huck & Georg Kirchsteiger & Joerg Oechssler, 1997. "Learning to Like What You Have - Explaining the Endowment Effect," Game Theory and Information 9702001, EconWPA, revised 15 May 1997.
    3. Dekel, E. & Scotchmer, S., 1999. "On the Evolution of Attitudes Towards Risk in Winner-Take-All Games," Papers 4-99, Tel Aviv.
    4. Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March.
    5. Guth, Werner, 1995. "An Evolutionary Approach to Explaining Cooperative Behavior by Reciprocal Incentives," International Journal of Game Theory, Springer, vol. 24(4), pages 323-44.
    6. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215, December.
    7. Robson, Arthur J., 1996. "The Evolution of Attitudes to Risk: Lottery Tickets and Relative Wealth," Games and Economic Behavior, Elsevier, vol. 14(2), pages 190-207, June.
    8. Karni, Edi & Schmeidler, David, 1986. "Self-preservation as a foundation of rational behavior under risk," Journal of Economic Behavior & Organization, Elsevier, vol. 7(1), pages 71-81, March.
    9. Ely, Jeffrey C. & Yilankaya, Okan, 2001. "Nash Equilibrium and the Evolution of Preferences," Journal of Economic Theory, Elsevier, vol. 97(2), pages 255-272, April.
    10. Robson, Arthur J., 1996. "A Biological Basis for Expected and Non-expected Utility," Journal of Economic Theory, Elsevier, vol. 68(2), pages 397-424, February.
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    Cited by:
    1. Sandholm, William H., 2007. "Evolution in Bayesian games II: Stability of purified equilibria," Journal of Economic Theory, Elsevier, vol. 136(1), pages 641-667, September.
    2. Olcina Vauteren Gonzalo & Calabuig Alcántara Vicente, 2007. "Cooperation and Cultural Transmission in a Coordination Game," Working Papers 201066, Fundacion BBVA / BBVA Foundation.
    3. Kenichi Amaya, 2004. "An Evolutionary Analysis of Pre-Play Communication and Efficiency in Games," Discussion Paper Series 165, Research Institute for Economics & Business Administration, Kobe University.
    4. Norman, Thomas W.L., 2012. "Equilibrium selection and the dynamic evolution of preferences," Games and Economic Behavior, Elsevier, vol. 74(1), pages 311-320.
    5. Rieger, Marc Oliver, 2014. "Evolutionary stability of prospect theory preferences," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 1-11.
    6. Thomas Norman, 2004. "Dynamically Stable Preferences," Economics Series Working Papers 207, University of Oxford, Department of Economics.
    7. Kuran,T. & Sandholm,W.H., 2002. "Cultural integration and its discontents," Working papers 20, Wisconsin Madison - Social Systems.

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